The Bank of England cut its base rate by o.25% to 5% on Thursday to stop the economy’s slide towards recession. However, relief for home owners was instantly undermined by a new wave of mortgage rate increases from Britain’s biggest lenders. Many lenders are yet to pass on the recent base rate reductions - instead they are busy increasing rates, demanding larger deposits, tightening lending criteria and, in some cases, withdrawing deals from the market altogether. Most of the big lenders, including Halifax, Nationwide, the Woolwich, Cheltenham & Gloucester and First Direct also said within minutes of the Bank’s announcement that they will be cutting their standard variable mortgage rates by the full 0.25%. Both Nationwide and Alliance & Leicester are believed to have been overwhelmed by applications from borrowers coming off cheap fixed deals and want to choke off the demand with yet another big increase of upto 0.35% in less than two weeks. The increases followed similar moves from Woolwich, Halifax and Abbey.
Posts Tagged ‘Rate reduced’
Lenders raise rates despite cut by the Bank
Saturday, April 12th, 2008Feds slash rates to 2.25%
Tuesday, March 18th, 2008Today, the US Federal Reserve slashed interest rates by 0.75% to 2.25% in a desperate attempt to prevent meltdown in the financial markets. The decision followed the weekend bailout of Bear Stearns, which was saved by rival JPMorgan Chase with the help of Fed cash. The shocking demise of Bear Stearns has prompted fears on Wall Street and in the City that the credit crunch could claim yet another high profile victim as lending between banks dries up. The Fed had previously cut rates by 1.25% to 3% this year alone and pumped billions of dollars into the markets. Although this has so far done little to restore confidence or calm. There are great concerns that the Fed and other central banks are powerless to solve the crisis. Pressure is now growing on the Bank of England and European Central Bank to cut rates, although both are concerned about rising inflation. Official figures released showed that inflation in Britain rose sharply in February from 2.1% to 2.5%, leaving the City split on the Bank of England’s next rate call.
Egg slashes savings rate by 0.5%
Wednesday, February 13th, 2008Following last week’s rate cut by the Bank of England, Egg has slashed the rate on its internet savings account by 0.5% - double the cut in the base rate. Until the end of last year Egg’s Internet Account came with a promise that its before-tax rate would at least match base rate – 5.25% from last week. But now that the guarantee has run out, the bank has taken a heavy hand to the account. Its loyal savers now earn 4% after savings tax (5% before tax) down from 4.4% (5.5%). Customers looking for a higher rate may want to switch to newcomer Kaupthing Edge which has said it will not be reducing the 6.50% it pays to online savers, despite the change to the base rate.
Mortgage lenders rush to cut rates
Sunday, February 10th, 2008Within hours of the Bank’s announcement at noon, nine of the top ten lenders said they would pass the full quarter-point cut to their borrowers. Only the stricken Northern Rock did not move its rates following the decision to bring down rates from 5.5% to 5.25%. The ‘rush to cut’ follows criticism of banks and building societies for ripping off mortgage holders after the last rate reduction just before Christmas. About 20% of lenders did not pass on the whole of the December decrease to hard-pressed borrowers. The rate cut will help only the minority of borrowers, roughly one in five, who have a mortgage with a variable interest rate. About 50% of homeowners have a fixed-rate loan which will not be affected.
Bank cuts interest rates to 5.25%
Saturday, February 9th, 2008The Bank of England cut interest rates on Thursday by a quarter point to 5.25 percent despite calls for a half-point cut. The widely expected quarter point cut by the Central Bank was modest compared to the recent cuts made by the US Federal Reserve (1.25% points last month alone). The Bank’s move will be welcomed by many mortgage borrowers, but homeowners who do not have a mortgage deal directly linked to the base rate may be disappointed as some lenders have been increasing their own rates in anticipation of a cut. The decision by the Bank of England’s Monetary Policy Committee comes as more evidence emerges of a slowdown in economic growth both in the UK and overseas.
Many lenders failed to pass on rate cut
Wednesday, January 9th, 2008According to figures, eighteen of the 103 mortgage lenders failed to pass on any of last month’s interest rate cut, while sixteen reduced their rates by less than the full 0.25%. However, many banks and building societies have taken the opportunity of the interest rate cut to reduce their savings by more than the 0.25% reduction in base rates. A total of 117 providers have so far cut their savings rates, with just 15 leaving them unchanged. Alliance & Leicester has made the biggest reductions to its savings by slashing rates by up to 0.5%, while HSBC has reduced some accounts by up to 0.49%. Britain’s biggest mortgage lender Halifax and Bradford & Bingley have both cut rates paid to savers by up to 0.4%, while a number of banks and building societies, including Britannia, Royal Bank of Scotland and NatWest, Yorkshire Bank and Sainsbury’s have decreased them by 0.3%. Will another rate cut mean banks carry on cheating customers even more?
